Paraguay
Land of opportunities
PARAGUAY IS IN THE CENTER OF SOUTH AMERICA
COUNTRY PROFILE OFFICIAL NAME
Republic of Paraguay SURFACE
CAPITAL
Asuncion
406,752 km2 GOVERNMENT SYSTEM PRESIDENT
Mario Abdo Benitez (2018-2023)
Presidential Republic POPULATION (2020)
7,453,695 OFFICIAL LANGUAGES
Spanish and Guarani
LITERACY RATE
94,3% URBANIZATION RATE
60%
CURRENCY
Guarani (PYG)
SOURCES: BCP, DGEEC, Banco Mundial
MAIN ECONOMIC INDICATORS GROSS DOMESTIC PRODUCT - GDP (2021)
GROSS DOMESTIC PRODUCT PER CAPITA (2021)
GDP GROWTH (2021)
GDP GROWTH for 2022 (BCP projection, Jan. 2022)
USD 40,305 mill.
5,0 %
INFLATION (2021)
6,8%
EXCHANGE RATE (Mar.2022)
6,963 (Gs./USD)
SOURCES: BCP, DGEEC, FMI
USD 5,481
3,7%
FOREIGN CURRENCY RESERVES (Jan. 2022)
USD 9,631 mill.
PUBLIC EXTERNAL DEBT (December 2021)
USD 11,450 mill. (27,1% of GDP)
VARIATION OF PARAGUAYAN GDP 12,0% 11,1%
Average Growth 2006 - 2020: 3,8%
10,0% 8,3% 8,0% 6,5% 5,4%
6,0%
5,3%
4,8%
4,3%
4,3% 4,0%
5,0%
4,8%
3,7%
3,2%
3,0%
2,0%
0,0%
2006
2007
2008
2009 -0,3%
2010
2011
2012 -0,7%
2013
2014
2015
2016
2017
2018
2019
2020
-0,4%
-0,8%
2021
2022 (p)
-2,0%
In recent years Paraguay maintained positive average growth, despite the volatility of its main trading partners. In 2020 and 2021, remained as the least affected country in the region by the COVID-19 Pandemic.
SOURCE: BCP – 2022 “BCP projection”
GDP COMPOSITION Taxes on products
7%
Agriculture
7%
Livestock
3%
Government Services
9%
Forestry,Fishing, Mining
1%
Home Services
5%
Manufacturing
Restaurants and Hotels
20%
2%
Company Services
2%
Real Estate
6%
Finance
Construction
6%
8%
Telecommunications
3%
Transportation
4%
Electricity and water Commerce
10%
SOURCE: BCP- año de base: 2021
7%
EXPORT COMPOSITION EXPORTS WITH ADDED VALUE (Millions USD)
VALUE AND COMPOSITION OF EXPORTS 1.400
USD 2,500 millions / 2003
1243 1.200
Energy
50%
Primary Products
29%
MAO
17%
MIO
4%
1.000
Manufactures of Idustrial Origin
900
800
USD 10,547 millions / 2021
Productos Primarios
47%
600
400
MOA
26%
Energía
15%
MOI
12%
200
53 0
MAO: Manufactures of Agrarian Origin MIO: Manufactures of Industrial Origin SOURCE: BCP
295
Maquila Regimen Exports
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
FOREIGN DIRECT INVESTMENT (FDI) EVOLUTION FDI STOCK IN MILLIONS USD 8.000 6.844
7.000 6.166
6.142 6.000 5.161 5.000 4.081 4.000
3.457
3.000 2.028
2.000
1.000
1.399 893
-
SOURCE: BCP
659
825
892
979
2.333
2.653
5.321
5.559
6.683
6.457
6.180 6.298
FOREIGN DIRECT INVESTMENT (FDI) COMPOSITION BALANCE OF FDI IN MILLIONS USD AT THE END OF 2020 MAIN INVESTMENT SECTORS
MAIN COUNTRIES OF ORIGIN 900 800
801 796
1.400 759
723
715
700
1.000
600 500 400 300 200 100 -
SOURCE: BCP
800 431 428
600
336
400
250 181 168 167 154 136 135
1.238
1.200
200 -
861
773 557
498 365 351 313
268 251 245 133 129 100 97
TRUSTWORTHY FOR FOREIGN INVESTMENTS
Ireland
Netherlands Russia
Sweden Canada
United Kingdom
United States
Germany Belgium
France
Mexico
Mainland China
Luxembourg
Portugal
Switzerland
Guatemala
Cayman Islands
Japan Republic of China Taiwan
Spain Austria
Costa Rica
South Korea
Hong Kong
British Virgin Islands India Panama
Philippines
Venezuela
Ecuador
Colombia
Peru
Brazil
Bolivia Chile
Uruguay Argentina
41
countries in 2020
Australia
COUNTRY RISK RATING
SOURCES: Standard and Poor’s, Moody’s, Fitch Ratings
LEADER IN FAVORABLE BUSINESS CLIMATE BUSINESS CLIMATE INDEX
INDEX OF EASE TO DOING BUSINESS/ RANKING
BUSINESS CLIMATE INDEX COUNTRY
200 180
RANKING
Paraguay
1
160
Chile
2
140
Brazil
3
Colombia
4
Peru
5
Mexico
6
Uruguay
7
Bolivia
8
Argentina
9
Ecuador SOURCE: Foundation Getulio Vargas 2021
188
150 124
120 101
100 80 60
60
67
40 20 0
10 SOURCE: World Bank
76
125
126
129
THE MOST SIMPLE AND COMPETITIVE TAX SCHEME TAXES Maximum rate for corporate income tax
10%*
30%
25%
34%
10%
Maximum rate for personal income tax
10%
35%
36%
28%
27%
Common indirect tax rate (e.g. VAT)
10%
21%
22%
17%
19%
35%
106%
42%
65%
84%
Total referential of taxes and social contributions (according to the World Bank)
* In the case of distributing dividends, an additional tax of 15% is applied to net income. The two taxes together reach a maximum of 23.5%.Más información sobre este texto de origen SOURCES: FDI Intelligence, Ministry of Finance
TAX REFORM
TAX EFFECTIVE CHARGE IMPACT ON FOREIGN COMPANIES
10%
TAX ON PROFITS
15%
TAX ON DIVIDENDS AND PROFITS
0%
TAX ON PROFIT REMITTANCES
IRE
10%
IDU
13,5% OR TAX ON NON-RESIDENTS
INR
13,5% Overall Taxes = 23,5% SOURCE: Ministry of Finance
0%
LABOR REGIME
In accordance to the current paraguayan Labor legislation (Law 213/93 and ammendments)
PAID HOLIDAYS
OTHER IMPORTANT DATA •
WORKING HOURS: 48 per week
•
13TH SALARY: paid at the end of the year (equal to 1/12 of the yearly earned salary)
18 working days
•
LEGAL MINIMUM WAGE (05/2021): Gs. 2,192,839 (USD 324)
30 working days
•
Maternity Leave and nursing time
SENIORITY
PAID HOLIDAY
0 to 5 years
12 working days
More than 5 to 10 years More than 10 years
Social Security (IPS)
Employer: 16.5%
* For further information about the labor legislation, see the Law 213/93 (Labor Code), and their amendments and implementation rules.
Employee: 9%
LEADER IN THE GENERATION OF RENEWABLE ENERGY GENERATION OF ELECTRICITY FROM RENEWABLE SOURCES (% OF TOTAL) 100%
100% 89%
90% 80%
74% 68%
70%
64%
60%
53%
53%
50%
44%
40% 31% 30%
28%
20% 10% 0%
SOURCE: World Bank / FDI Intelligence
Paraguay
Uruguay
Brazil
Colombia Venezuela Ecuador
Peru
Chile
Bolivia
Argentina
ENERGY COST IN CENTS OF USD PER KWH (2020) MEDIUM INDUSTRIAL TENSION Bolivia
0,175
Peru
0,171
Uruguay
0,169
Brazil
0,163
Argentina
0,155
Colombia
0,132
Ecuador
0,119
Chile
0,097
0,066
Paraguay
The surplus of electricity produced by the Itaipú and Yacyretá hydroelectric plants, corresponding to Paraguay, is exported to Brazil (78%) and Argentina (22%). With this, Paraguay is one of the largest producers and exporters of renewable energy in the world. Electric power is currently the second export product in the country. SOURCES: ANDE, World Bank, FDI Intelligence
0,00
0,02
0,04
0,06
0,08
0,10
0,12
0,14
0,16
0,18
0,20
In July 2019, National Congress approved a new program to strengthen the transmission of electric energy, including two new 500 kV lines, in addition to the expansion and improvement of the distribution system; this will allow full supply of energy for large parts of the national territory.
Incentives for national and international investments
KEY FACTS FOR INVESTMENT IN PARAGUAY
Greater projected economic growth in Latin America between 2020 and 2024
Lowest indirect tax rate in the region
Lowest corporate tax rate in the region
Lowest energy costs in the region
Low public debit
The National Government’s structural reforms are underway.
(according to IMF)
Growing economic diversification
SOURCE: MIC/REDIEX
Macroeconomic discipline
Economic resilience to external factors
(crisis in Argentina and Brazil)
Youngest population in the region
MAQUILA REGIME Regime for the production of goods and services for export
•
TAX OF 1% on the final value of the produced goods/ services.
•
Suspension of import taxes for materials, machinery and other necessary supplies.
•
VAT returns on the purchase of goods and services, as a tax credit.
•
Tax Exemption on income and dividends remittances.
SOURCE: MIC/REDIEX
60/90 Investment Incentive Law Import tax on Capital Goods (Machinery and Equipment)
0%
Value Added Tax (VAT) on Capital Goods (Local or foreign acquisition)
0%
DEBT: Tax applied on remittances and payments of Interests (for investments equal or higher than USD 5 million)
0%
PROFITS: Tax applied on remittances dividends and utilities (for 10 years for investments equal or higher than USD 5 million)
0%
SOURCE: MIC/REDIEX
OTHER INCENTIVES RAW MATERIAL REGIME Benefits on the imports of raw material and implements with a 0% customs tax, provided proof it is used in their own production process, and there is no national production for them
PRODUCT AND NATIONAL EMPLOYMENT REGIME Law 4558/11 grants a margin of preference for Paraguayan products and services in public purchases.
BENEFICIARIES:
“Each industry of the country, registered at the Ministry of Industry and Commerce.”
SOURCE: MIC/REDIEX
OTHER INCENTIVES AND THE AUTOMOTIVE REGIME
FISCAL ADVANTAGES
• •
SOURCE: MIC/REDIEX
Exemption of customs tax VAT on import is calculated on 20% on the actual customs value
DEVELOPMENT OF THE MOTORCYCLE PARTS SECTOR Currently, there are 25 companies registered in this sector.
• • • •
Plastic parts Suspension parts Metal parts Rubber parts
OTHER INCENTIVES / LAW 5542 INVESTMENT GUARANTEE MAIN BENEFITS
•
Invariability of the tax rate of the corporate tax for companies for a period of up to 10 years, counted from its start, with the possibility of extending the deadline for exceptional projects *
•
Favorable exchange rate, for capital and profits transfers.
•
Special regime for exports of part or all of the goods produced. Companies may maintain a percentage of foreign currency abroad, when these are necessary for the payment of obligations; or compliance with the remittance of the profits that the investments generate.
* Up to 15 years for investments between USD 50 MILLION and less than USD 100 MILLION; up to 20 years for investments in industrial projects of an amount equal to or greater than USD 100 MILLION.
SOURCE: MIC/REDIEX
OTHER INCENTIVES / PPP LAW By this law, rules and mechanisms to promote the public sector-related investments by the public-private partnership are established.
Elegible projects are:
Road, railway, port and airport projects
Waterway projects, riverway dredge and navigability maintain projects
Urban improvement, equipment and development projects
SOURCE: STP
Social infrastructure
Drinking water supply and sewage disposal
Electrical infrastructure
Other infrastructure investment and public services interest projects
FREE TRADE ZONES
Goods and Services
Maintenance of the origin of the products introduced in the Free Trade Zone, if there is no change in the tariff line (Law 523/95, Art. 20; Decree 7068/2006 and Decree 1933/2019)
SOURCE: Ministry of Finance
Exemption of all types of departmental and municipal fees
Single tax of 0.5% on the invoice of sales to third countries
Real estate infrastructure for different types of activities
Environmental license
Specific protection measures for their products, such as a differentiated import fee, prior import licenses, among others
Agile customs processing
EXPANDED MARKET AND NETWORK OF COMMERCIAL AGREEMENTS •
Paraguay as a Mercosur State Party to Mercosur has access to a market of more than 260 million inhabitants.
•
Paraguay receives special and differentiated treatment in the following areas:
o o o o
Preferential rules of origin: 40% regional content and 60% extrazone for a majority of the products. Positive concessions for Paraguay in external negotiations National List of Exceptions to the Common External Tariff of Mercosur of 649 tariff items. Special regimes for the import of raw materials, agricultural inputs and capital goods and computer and telecommunications.
SOURCE: MIC/REDIEX
THE NEW AUTOMOTIVE SECTOR AGREEMENTS AND THEIR GREAT POTENTIAL
•
Vehicles and auto parts with a regional content index (ICR) of 50% will enter the signatory countries cleared of customs duties
•
The incorporation of opportunities for the development of vehicles with new engines (electric, hybrid, gas, hydrogen, etc.), starting with a Regional Content Index (ICR) of 30%.
•
Auto parts manufactured in one country that have 40% of ICR will have access in the other country with zero tariff up to an amount of US $ 35 million (gradual increase of amounts and ICR until 2026)
•
Preferential access for maquila products with ICR less than 50%, starting with USD 350 million and an ICR of 40% to reach USD 750 million and ICR 50% in 2027
•
Preferential access for both countries for 1,000 vehicle units of people with a reduced ICR (30% ICR for Paraguay and 35% for Brazil)
SOURCE : MRE/MIC
PARAGUAY WILL BE THE COUNTRY MOST BENEFITED WITH THESE NEW AGREEMENTS
•
Agreement reached in June, 2019 after 20 years of negotiation.
•
•
One of the most important trade agreements, at global level.
Negotiations concluded in August, 2019
•
•
The agreement eliminates tariffs for 93% of Mercosur exports and grant preferential treatment for almost all the remaining 7%.
Preferential access for almost 97% of Mercosur’s export offer
•
•
The EU liberalizes 99% of Mercosur's agricultural exports. For 81.7% it will eliminate import tariffs and for the remaining 17.3% it will offer preferential import quotas.
For first time, Switzerland and Norway established preferential quotas for Mercosur countries
•
Main beneficiary export products for Mercosur are bovine meat, poultry meat, corn, vegetal oils, among others.
•
Commercial opportunities in the sectors of organic sugar, bovine meat, poultry meat, rice, corn, honey and ethanol from Paraguay
SOURCE : MRE/MIC
NETWORK OF COMMERCIAL BILATERAL AGREEMENTS AGREEMENTS IN NEGOTIATION OF MERCOSUR WITH:
As a member of Mercosur, Paraguay is part of a network of commercial agreements. AGREEMENTS OF PARTIAL SCOPE OF ECONOMIC COMPLEMENTATION OF MERCOSUR WITH:
Canadá
Corea del Sur
Singapur
MERCOSUR MAINTAINS DIALOGUES FOR NEGOTIATIONS WITH:
Association of Southeast Asian Nations (ASEAN)
Gulf Cooperation Council (GCC)
Chile
Bolivia
Eurasian Economic Union (EEU)
México
Cuba
Colombia
Peru
Andean Nations Community
Other Commercial Agreements of Mercosur with: Australia
Japan
Lebanon
Morocco
India Pakistan SOURCES: MRE / MIC
Tunisia
Turkey
Israel
Palestina
South Africa Customs Union
BILATERAL COMMERCIAL AGREEMENT NETWORK Paraguay has Investment Agreements with the following countries: Germany
El Salvador
Peru
Austria
United Arab Emirates
Portugal
Spain
Czech Republic
Chile
France
Romania
South Korea
Great Britain
South Africa
Costa Rica
Hungary
Switzerland
Cuba
Italy
Taiwan
Ecuador
Netherlands
Venezuela
Belgium-Luxemburgo
Además, Paraguay cuenta con acuerdos para evitar la doble imposición con Chile, Emiratos Árabes, Taiwán y Uruguay.
HIGH LEVELS OF PRODUCTION AND EXPORT CAPACITY
1°
Net Exporter of Clean Energy in the World
3°
Mate tea Exporter in the World
6°
Soybean oil Exporter in the World
2°
Stevia Producer in the World
4°
Corn Exporter in the World
8°
Meat Exporter in the World
POST-PANDEMIC ECONOMIC MOTORS PRIORITIZED SECTORS
High quality of life at a reasonable cost
Young labor force and demographic bonus Creative Industries
Light Manufacturing and BPO
Personal Services
Robust macroeconomic stability
Forestry
Tourism
Mining with Added Value
IT Service Management
Abundant and competitive energy
Value-Added Agriculture Based Industry
Regional Logistics Central location in Mercosur
SOURCE: Paraguay Post Covid-19, Roberto Artavia, 2020
Abundant and diverse natural resources
COUNTRY BRAND
1
STRATEGIC COMPETION TOOL
PRIORITY SECTORS • • • • •
Exports Foreign Direct Investment Tourism Culture Creative Industries
2
3
ASSOCIATED WITH QUALITY PRODUCTION
PROMOTES TOURISM AND CULTURE
CONCEPTS THAT SELL • • •
4
HIGHLIGHTS PARAGUAY’S BEST QUALITIES
Paraguay as an energy producer Water, as an element of connection with the world, culture, commerce, business and tourism Young and growing country, with natural resources and abundant opportunities.
PARAGUAY Land of Opportunities
SUSTAINABLE BUSINESS OPPORTUNITIES IN PARAGUAY
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SOURCE: SDG INVESTOR PLATAFORM https://sdginvestorplatform.undp.org/
RENEWABLE RESOURCES AND ALTERNATIVE ENERGIES
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TECHNOLOGY AND COMMUNICATIONS
SUSTAINABLE BUSINESS OPPORTUNITIES IN PARAGUAY
INFRASTRUCTURE
FOOD AND DRINKS
HEALTH CARE
EDUCATION
RENEWABLE RESOURCES AND ALTERNATIVE ENERGIES
SOURCE: SDG INVESTOR PLATAFORM https://sdginvestorplatform.undp.org/
FINANCING
TECHNOLOGY AND COMMUNICATIONS
THANK YOU! (+595) 021 616 3000 info@rediex.gov.py - www.rediex.gov.py Mcal. López 3333 c/ Dr. Weiss | CP: 1892 | Asunción - Paraguay